1041 for 2022 questions and clarifications please

[swarts1]

Thank you in advance for any insight into these questions.

Working on completing the 1041 for living/now irrevocable family Trust account with EIN. My dear Dad left this earth in 2014, Mom in 2022. The house and bank accounts were put in their revocable trust est2001. After Mom passed in Feb2022, the trust became irrevocable. From the 1099s for 2022, the bank accounts earned over $2k in interest. Therefore 1041 is required for 2022.

My understanding is the reporting calendar or short year would be DOD2022 to Dec31, 2022 and would need to file by April18 2023. The fiscal year reporting would be Feb2022 to Jan31 2023 and would file by May15 2023.   The plan is to use calendar year since the house didn't sell until end of February2023, distributions not made and there are remaining timeshares owned by parents that need resolution.

After funeral expenses and services were paid, worked on liquidating assets. We sold 4 vehicles at FMV in Apr to Jun2022. We maintained the house (taxes, insurance, utilities, other maintenance) but then repaired the house in order to sell and spent approximately $30k, plus realtor fees, taxes and upkeep expenses. The house sold at end of Feb2023 and house funds were distributed to beneficiaries in Mar2023.

For tax year 2022:
1) Report the income from interest 1099-INT.
2) Are funeral expenses and services deductible, if so what form and where?
3) Report parents vehicles sold, they sold for less than FMV so no gain but there is a loss. How to report on 8949 and Schedule D of 1041 in Turbo Tax Business? The 3 vehicles were titled under the parents name, the 4th vehicle was titled under Mom with TOD the trust.

4) Are house maintenance expenses deductible?  If so which form and where?

Do I report all the house selling expenses now or wait until tax year 2023, if so which form and where? Believe selling expenses will be reported in 2023 with sale of house.

For tax year 2023, I have Comparative Market Analysis (CMA) from our realtor for each period identified below.  What will be the cost basis for the house?
- FMV 50% from 2014 when Dad left and 50% from 2022 when Mom left
- FMV 100% when Mom left

[swarts1]

2) Not deductible per IRS

https://www.irs.gov/publications/p559#en_US_2022_publink100099741

Funeral and Medical Expenses

No deduction can be taken for funeral expenses or medical and dental expenses on the estate's Form 1041.

Funeral expenses.

 

Funeral expenses paid by the estate aren't deductible in figuring the estate's taxable income on Form 1041. They are deductible only for determining the taxable estate for federal estate tax purposes on Form 706.

[RobertB4444]

1.  You definitely need to report the interest.

2.  As you figured out funeral expenses are not deductible, unfortunately.

3.  If you didn't have to file a tax return I would tell you not to even report the sale of the cars.  But since you are you may as well.  Report the cars as one sale on schedule D with the total amount received for all of them as the sales price and the value set at the exact same amount.  No profit, no loss.

4.  You can deduct utilities paid and small repairs and maintenance that you had done in 2022.  Any renovations or improvements done to the property in order to prepare it for sale are added to the basis on the house and used to offset any gains you might have from the sale in 2023.

5.  Assuming that your father left the house to your mother in 2014 then she owned it entirely at her date of death and the basis would be 100% of the value at your mom's date of death plus whatever renovation costs you add to it between then and the sale date.

@swarts1 

[swarts1]

3) A very nice lady "Kay P" at Turbo Tax Support explained in detail how to enter the sale of the 4 vehicles so that they showed up under the correct Form 8949 and Schedule D. 

We first entered the amount from "Forms" view by searching and adding a schedule D.  Unfortunately only 2 transactions were allowed and we could not added the other 2 transactions.  After going back into the "Step-by-Step" view and noting where the additions were made, we went back to Step-by-Step and added the other 2 transactions under "Stocks, Mutual Funds, Bonds, Other" under Income, but after viewing in Forms only the latest 2 transactions showed up.  So went back in the same place, deleted all transactions and added the 4 transactions, then checked in Forms and saw the entries were correct.  Thank you Kay P and Turbo Tax!

[swarts1]

4) For questions #4 Kay P referred me to https://ttlc.intuit.com/community/tax-credits-deductions/discussion/yes-the-costs-incurred-by-the-tr...

"Can I take expenses associated with holding property in trust (property tax, insurance, utilities, condominium charges) as a deduction in the trust return."

[swarts1]

Thank you for your response!

Concerning 3)  just curious what is the reason for reporting no loss?  Expenses were incurred including insurance from DOD to sale date, new battery (was dead) and smog inspection in order to sell the vehicles.